Corporate governance is the process of creating rules, policies, control and resolutions to promote positive corporate culture and conduct. It also safeguards organizations from business dangers and crises, such as cyber-security threats, corruption in leadership economic downturns, political instabilities. It includes contingency plans to aid companies in coping with these forces of business and come out the other side stronger and more resilient.
Corporate governance structures and practices vary according to the size of the business, industry, ownership structure and the jurisdiction. Despite their differing characteristics, these governance structures and practices should share a common goal: generating long-term value for shareholders. They should also be able to adjust their governance practices to meet this objective.
The board of directors for a company is responsible for establishing goals for the company’s strategic direction, appointing senior management and monitoring them, as well as representing the interests of shareholders. The board members must understand their responsibilities, and work with the company’s senior management to ensure that these responsibilities are fulfilled in a manner which promotes growth for the business and financial performance.
Stakeholders should be urged to engage in dialogue and engagement with the board of directors and management. They will be able voice their opinions on issues that are traditionally the management and the board the management, such as strategic direction and decisions. In doing this it is vital for management and the board to be open and honest with stakeholders about their governance structures and processes and their reasons for using them.